Speaking at the annual general meeting of the International Air Transport Association in Singapore, Willie Walsh said that if major powers are forced to pay for carbon dioxide emitted by services to and from the continent, they could impose aviation taxes on European carriers or block flights. US carriers are launching a European legal challenge against the ETS next month, while Russia and China have also made hostile representations to EU officials about the scheme, arguing that Beijing should be exempted from ETS because it is introducing its own curbs on aviation emissions.

"It is clear that the countries are going to retaliate, whether in the form of imposing additional taxes on European airlines or restricting access to markets," said Walsh, chief executive of International Airlines Group. Passengers on European airlines are already facing price increases of up to €40 (£35) per return fare under the scheme, which carriers must join from January next year. Once they have joined the ETS, carriers will have to pay for carbon dioxide emissions that exceed a certain threshold by acquiring credits.

"The uncertainty will add more cost," said Walsh. "It will add more concern in the mind of travellers that they will face disruption to services and I think there is a real risk this could happen."

Walsh has called for a global emissions trading scheme for airlines and urged the EU to implement a compromise in the meantime. Walsh said Brussels should resort to a "plan B" that will charge carriers for regional and domestic flights only. "There needs to be a plan B. It is unacceptable that airlines face the prospect of retaliation because of the actions of the EU. Plan B for me would be to restrict the scheme to intra-Europe."

The chief executive of Airbus, the European aircraft manufacturing giant, echoed the concerns of airlines in a letter to the EU climate commissioner, Connie Hedegaard. According to the Financial Times, Tom Enders said it was "madness to risk retaliation" from major global powers.

In a joint letter with the chief executive of Virgin Atlantic, Steve Ridgway, who is also chairman of the Association of European Airlines, Enders warned: "If the EU goes ahead with its plans, China has already ... announced its intention to deploy counter measures against European aviation." The letter added: "Past experience with the US has demonstrated that it will not shy away from retaliatory measures. European airlines and Airbus are likely targets ... We cannot afford a trade conflict of this magnitude."